UK Politics

Child benefit cut will go ahead, says Osborne

  • 13 January 2012
  • From the section UK Politics
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Chancellor George Osborne has said child benefit for higher rate taxpayers will be removed, after ministers' hints the policy could be made "fairer".

But he said he would set out in the next months how the policy would be implemented.

David Cameron acknowledged there was an issue with the £42,475-a-year threshold - amid criticism the changes unfairly hit single earner families.

Labour said the policy was "unravelling already" and was an "utter shambles".

'Unfairness' criticism

Child benefit is available for every child in the UK below the age of 16 and is one of the few remaining non-means tested benefits.

It is worth £20.30 every week for a first-born child and £13.40 for each subsequent child. It is paid to the parent directly responsible for care of the youngster - in practice, it is most often claimed by the mother.

In October 2010, Mr Osborne announced plans to scrap child benefit for any household with a parent above the 40% tax threshold - currently about just over £42,400.

Critics say it would unfairly hit a single earner family which is just over the threshold - while a couple both earning just under £44,000 a year each would keep the benefit.

In an interview with Parliament's House Magazine, Mr Cameron said: "Some people say that's the unfairness of it, that you lose the child benefit if you have a higher-rate taxpayer in the family (but) two people below the level keep the benefit.

"So, there's a threshold, a cliff-edge issue. We always said we would look at the steepness of the curve, we always said we would look at the way it's implemented and that remains the case."

Asked about the issue in an interview with BBC Radio Surrey's Breakfast programme, Culture Secretary Mr Hunt said: "We are looking at ways to make it fairer."

But, asked if any further changes to the policy were sought, Chancellor George Osborne said: "We're very clear that it is fair that those who are better off in our society make a contribution to the saving of money we need to make... so we will be removing child benefit from higher rate taxpayers.

"We haven't set out how we're going to implement that and we're going to do that in the next few months.

"But the principle that it's not fair to ask someone who's earning say £20- or 25,000 to pay for someone who's on £80- or £100,000 to get child benefit is one that I think is very important."

Mr Osborne has said the proposed cuts could save up to £1bn a year.

But Labour says they have caused "huge anxiety" and that all families need support in tough times.

Shadow Treasury minister Chris Leslie said his party had "repeatedly warned that the government's current plans to cut child benefit are unfair and highly bureaucratic".

He said it appeared the policy was unravelling - potentially leaving a "black hole" in the public finances and threatening more bureaucracy if people were to be means-tested for the benefit.

"These ill-thought-through plans are due to hit families in less than 12 months' time, so David Cameron and George Osborne urgently need to come up with some new proposals," he said.

Child benefit is taken up by 96-97% of the eligible population.

It is not yet clear how the government intends to implement the planned cuts, but it could involve HM Revenue & Customs, which administers the child benefit system, cross-referencing all claimants against their tax records.

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